Suing a Trustee vs. Suing an Individual in Trust Litigation

A trustee is a fiduciary who oversees the administration of a trust. Typically, if a person wishes to sue the trust, they sue the trustee in their fiduciary capacity. In other words, they are not suing the trustee individually.

Of course, there are situations where someone may need to sue the trustee in their personal capacity. For example, if a trust beneficiary believes that the trustee has breached their fiduciary duties by, say, misusing trust funds for personal gain, the beneficiary could sue the trustee individually to recover those funds. Florida law authorizes a court to remedy such a breach of trust by, among other options, ordering “disgorgement” of the trustee’s ill-gotten gains.

Lack of Proper Service Required Reversal of Disgorgement Order Against Trustee

While it may sound overly technical, it is important to note that suing a trustee in their personal capacity is not the same thing as suing them in their role as trustee. A recent decision from the Florida Fourth District Court of Appeal, Miller v. Moore, highlights this distinction. This case involved two people, Moore and Miller, who were co-trustees of a Florida-based trust. Miller was also the sole trustee of a second trust based in Michigan. Moore was a beneficiary of both trusts.

In 2021, Miller, acting in his capacity as co-trustee of the Florida, sued Moore, seeking compensation for his work in that role. Moore then counter-sued, alleging that Miller improperly transferred $100,000 from the Michigan trust to his personal account, possibly to compensate himself for his work as a co-trustee of the Florida trust. Moore sought a disgorgement order, requiring Miller to repay the $100,000 to the Michigan trust.

Miller argued the Florida courts had no authority to order disgorgement with respect to the Michigan trust, because Moore only counter-sued him in his official capacity and not individually. The trial court rejected that argument and granted the disgorgement order, reasoning that Miller’s actions as trustees of the Michigan trust also breached his duties as a co-trustee of the Florida trust.

On appeal, however, the Fourth District disagreed. It held that when seeking to hold a trustee personally liable, as Moore did here, it was necessary to personally serve Miller with her countersuit. Absent such service, the Florida court never had personal jurisdiction over Miller. The Fourth District therefore returned the case to the trial court for further proceedings, including a determination over whether Miller has “sufficient contacts” with Florida to support an exercise of personal jurisdiction.

Contact a Pompano Beach Breach of Fiduciaries Lawyer Today

Trust litigation often involves resolving highly technical questions of law. You can never assume that just because you have a strong case, that will be sufficient to prevail in court. This is where an experienced Pompano Beach estate and trust litigation lawyer can help. Contact the offices of Mark R. Manceri, P.A., today at 954-491-7099 to schedule an initial consultation.

Source:

4dca.flcourts.gov/content/download/2438434/opinion/Opinion_2023-1402.pdf